A meltdown is coming to the higher education sector, billionaire computer magnate and NBA Dallas Mavericks owner Mark Cuban warned in a blog post on May 13. With education costs that rise each year, a hungry market of students plied with easy-to-get loans, and little incentive for colleges to make meaningful changes, the arena is ripe for a major shakeup, the entrepreneur writes.
“Like the real estate industry, prices will rise until the market revolts. Then it will be too late,” Cuban blogged. “Students will stop taking out the loans traditional Universities expect them to. And when they do tuition will come down.”
[Estimate your net price of college.]
Without their usual influx of funds, universities will have to cut costs “beyond what they are able to... which will all lead to a de-levering and a de-stabilization of the University system as we know it,” he writes.
But what about those students who are considering college now? As it turns out, the Indiana University—Bloomington graduate and self-made billionaire also has some tips for them to make smart decisions, despite the current higher ed environment.
"[The] bottom line is that prospective and current college students have to be incredibly smart consumers," Cuban wrote in an E-mail to U.S. News. "Decisions can't be made on emotions or prestige. Decisions have to be pragmatic."
In order to make a sound choice, students should look for colleges they can afford without the help of student loans, Cuban recommends, and should do enough research into college financial aid to be able to look past sticker prices.
"Sometimes, the best bargains are the least obvious," Cuban wrote. "Big state schools, while their tuitions may be somewhat lower, because they have little in financial aid to offer, may end up being more expensive than a smaller school with better financial aid programs and a little higher tuition."
[Find out which colleges claim to meet full financial need.]
Though high schoolers may be eager to flee from home, it may be worth considering a school close enough that you can continue to live with your parents, he notes.
"Go there for your first 2 years," recommends the entrepreneur, who transferred from the University of Pittsburgh to Indiana University to major in business administration. "Take freshman and sophomore classes, figure out what you want to major in if you don't already know, or confirm your major; then decide if you want to stay local or [go] to a cost-effective school that excels in your major."
[Use these tips to pick the right major for you.]
In an update to the post on his site, blogmaverick.com, Cuban says he plans to write more about the higher education bubble, including the role for-profit universities play within it. He also adds a key point for students: College is the time "to learn how to learn."
"Always remember this," Cuban wrote to U.S. News, "I have yet to ever talk to anyone who thought they didn't have a good time in college. Make the right business decision about your school and without question all the fringe benefits of college will find their way to you as well."
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